$EMR calls double in one day

Option traders are posting big profits today on bullish positions opened in Emerson Electric (EMR) only on session earlier.

On Sept. 27, Market Rebellion’s proprietary programs flagged the purchase of 5,400 November $67.50 calls for $1 to $1.10 with shares at $64.28. This was clearly fresh buying, as open interest in the strike was only 255 contracts before the activity appeared.

Those calls traded for as much as $2.25 so far today, more than twice their purchase prices. The stock rose 4.28% at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

EMR is up 0.65% to $66.83 this morning. RBC Capital upgraded the stock upgraded to “outperform” from “sector perform” and raised its price target to $77 from $65 before the market opened today. Bloomberg reported on Friday that hedge fund D.E. Shaw has built a stake the automation-equipment maker and wants the company broken up.